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Bank Credit Growth Jumps To 12%

Non-food credit growth at scheduled commercial banks has risen to 12 percent year-on-year, according to the Reserve Bank of India data released on Wednesday.

Fortnightly data released by the central bank showed that the outstanding non-food credit of scheduled commercial banks stood at Rs 81.48 lakh crore as on Jan. 5 as compared with Rs 72.78 lakh crore a year ago.

The growth in loans far outstripped the pace at which banks have been able to grow their deposit base. Deposits in the banking system rose by 4.45 percent year-on-year to about Rs 110 lakh crore as on Jan. 5.

The rise in non-food credit can be explained by the base effect playing in favour of banks. The banking system has been struggling with lack of demand for industrial credit. On Nov. 25, 2016, overall credit growth for scheduled commercial banks had hit 6.63 percent year-on-year.

Demand for corporate credit is now slowly coming back, according to Romesh Sobti, managing director and chief executive officer at IndusInd Bank. While announcing the bank’s third-quarter results last week, Sobti said the banking system was beginning to see steady demand for funding the capital expenditure in brownfield expansion.